Bootstrapping Part 2

The following is an excerpt from the book Smart Business, Stupid Business, written by Diane Kennedy of US TaxAid and Megan Hughes of Smart Business Incorporation.

Here are more strategies for funding your business by bootstrapping.

  1. Create a sales funnel. The sales process resembles a funnel. At the top end, the widest part, are the people who are just finding you, check out their options, considering using your services, buying your product, etc. If you can adapt your product or service to match the funnel, you can often pick up sales. For example, at the top, where the funnel is widest, you may want to offer an entry level product or a special report for free or at a reduced price. This may help you retain some of those people who otherwise may not have gone past the looking point.
  2. Can you create some kind of recurring business model, where you receive automatic monthly payments? This is a great way to generate steady cash.
  3. Create different service levels. Not all clients want the same thing. Can you create a premium service level that allows you to charge a higher rate for some of your current clients? What are the things that would make your services more valuable? Increased access to you personally? Front of the line option?
  4. As you create a product or a service, think about what other products or services could be offered to complement and augment it. What else do your clients or customers need? What other services can you give them to create additional streams of income for your business?
  5. Strategic relationships. When you focus on a niche, you often find that there are things you can’t do, but are things that augment your services perfectly. By affiliating with other service providers, you can create a bigger, higher-value product that benefits everyone.
  6. Create a high-end and low-end solution. One of our new passions is talking about the bi-modal graph. Image a two-hump camel. One hump represents the people who want hands-on, concierge service. The other hump represents people who want the lower-cost solution. The depression in the middle is what used to be our target market: people who wanted a little of both. Today that market is largely gone.
  7. Bill and collect in advance. It’s much easier to collect money up front then it is afterwards. It might be a little harder with the first sale, because your customer doesn’t have any experience with you, but after that, you’ve actually got to question why they don’t pay you in advance. If you are willing to extend credit make sure you bill at a premium. There is a cost to carrying debt, especially in a tight credit market.
  8. Give a discount to those that pay in advance. Instead of charging a premium to carry, give a discount to pay in advance. If you assess a late fee, the chances are you’re going to upset your client and never get the fee paid anyway. But, if you offer a discount for early payment, on the other hand, you’ve got a much better chance of being paid.

If you enjoyed today’s blog, why not pick up your copy of Smart Business, Stupid Business today. Buy through our website, and you’ll also get a free instant audio download of the entire book!